The better-than-expected Jobless Claims numbers this morning
add to the growing list of indicators that are pointing towards a
strong jobs reading from the Bureau of Labor Statistics tomorrow
morning. A positive labor reading tomorrow will be in-line with
all recent economic data that is showing a second-half 2013 ramp
up in the U.S. growth picture.
In addition to the better-than-expected Jobless Claims
numbers, the Challenger survey of job-cut announcements this
morning shows the December lay-offs level at the lowest since
June 2000. This follows Wednesday's ADP report that showed a
strong acceleration in the pace of job gains in December. The
employment components of the two ISM surveys also showed gains
that follow improvements in trade balance and spending trends,
both business as well as households.
All of this is prompting positive revisions to Q4 GDP
estimates, which have moved up from close to +1% at the start of
the quarter to almost +3% at present. The first look on Q4 GDP is
a couple of weeks away, but a growth pace in the +3% vicinity
will have pushed second half 2013 GDP to a pace more than double
the first half's rate. The consensus and the Fed's view is of
this second-half momentum carrying into 2014 and generating
sustainable growth in excess of +3%.
This favorable turn of events is confirmatory of the Fed's
Taper call. Minutes of the December FOMC meeting shows that the
Taper decision wasn't contentious. The FOMC members didn't see
that much value in the incremental purchases, but wanted to
emphasize that the support will be withdrawn in a measured and
They want to watch out for asset bubbles, and 'several
members' apparently commented on elevated stock market P/E
ratios, the high level of stock buybacks and the rise in margin
debt. But the committee overall appeared to be satisfied with the
cumulative improvement in the labor market since the current QE
program was instituted and saw fewer downside risks to the
economy's growth trajectory in 2014 and beyond.
In corporate news,
) report after the close today provides the 'unofficial' kick-off
for the 2013 Q4 earnings season. Officially, the Q4 earnings
season has gotten underway already, with results from 20 S&P
500 members out. All of the results that have come thus far are
from companies that have fiscal quarters ending in November that
get counted as part of the Q4 tally; Alcoa will be the first
S&P 500 member to report that operates on the calendar
In other news,
) missed expectations and guided lower while
) came out with a negative pre-announcement.
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